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The Biz Roundup March 21 & 22

In Hollywood, it’s back to the future.

Business at the multiplex is going gangbusters. Ticket sales are up 14 percent this year over the same period in 2008, according to the tracking firm Media by Numbers. Attendance is up 12 percent after falling the last two years.

But according to studios, sales for some new-release DVDs are down a jaw-dropping 40 percent, hammered by the recession, a saturated market (on sale now: the complete ninth season of “Murder, She Wrote”) and a shift to Internet downloads.

At least for the moment, Hollywood is heading back to the days when the theatrical run of a film was actually important for more reasons than serving as a marketing platform for home video. . . .

“Anything that can drive the audience to the theaters has an easier time getting made now,” said Kevin Misher, a former Universal and Sony executive and now a leading independent producer.

In addition to big “tent pole” blockbusters, that means movies that are fun to watch in groups: at least 10 musicals are in full-steam-ahead development, including a remake of “My Fair Lady.” And it means more pictures that are pre-branded: “Monopoly” and “Candy Land,” the movies, are on the way. Most of all, it means a strong return by major studios to middle-of-the-road, genre pictures. . . .

This middle ground once represented the meat of the movie business but receded over the last decade as the industry pursued the fringes of the market — tiny specialty films and blockbusters — because of the huge DVD upside, among other things. Generally speaking, the middle just wasn’t where the smartest people wanted to play.

(“Who Threw the DVD From the Train?,” New York Times, March 22) Shoestring and low-budget independent filmmaking for the last few years has been all about DVD sales with just the slightest nod to potential box-office bucks. The shift to boxoffice bonanza by the distributors has been devestating to independent filmmakers (I know, I work in the field), but not to those who realize that the new outlet is VOD (video-on-demand) and Internet subscription services. So while Hollywood goes back to basics (putting asses into theatre seats), enterprising producers and directors are rounding the VOD curve. And, on a side note, isn’t it curious how the New York Times has rounded up such a good roster of reporters who really know the movie business? While the LA Times seems to have lost all theirs (along with just about everything else that makes a paper worth reading?)

And, speaking of lowered DVD sales, guess who just got a temporary reprieve before losing its head on the chopping block?

On Thursday, [Blockbuster] assured investors it wouldn’t be going bankrupt anytime soon because it extended its line of credit with some big lenders.

The refinancing news overshadowed some depressing earnings numbers. That’s not surprising given that it was just two weeks ago that Blockbuster’s shares were temporarily halted at 22 cents after it disclosed hiring Kirkland & Ellis to help firm up its capital position. . . .

Blockbuster said it lost $360 million in the fourth quarter, compared with a $41 million profit a year ago. The loss was because of a noncash impairment charge of $435 million. Disregarding charges, it earned $80 million.

Revenue sank 12% to $1.38 billion because of a host of factors, including that there are fewer stores than a year ago and less-favorable foreign-exchange rates. . . .

Blockbuster, of course, faces fierce competition from Netflix and kiosk service Redbox, but its position as the giant in the bricks-and-mortar space is secure.

“The mom-and-pops are under quite a bit of pressure,” Keyes said. He added that, in a recession, consumers will “rediscover that rental is a great value.”

That being said, he bemoaned weak DVD titles of late but said movies popular in theaters now will help Blockbuster’s business in the next quarter.

(“Big-time bounce for Blockbuster,” The Hollywood Reporter, March 19) The big ones go down slow, but they do go down. Because of the impairment and their near-death credit risk, Blockbuster will not be investing in the technologies of the future, such as digital download. Leaving that to entrepreneurs like you and me. When Blockbuster officially becomes Blockbusted, we’ll all be pointing to this moment — when they abandoned digitial download — as the aneurysm that did-em-in.

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